Fast track sale in a voluntary administration

What is a fast track sale in a voluntary administration?

Estimated reading time: 6 minutes

Fast track sales involve the voluntary administrator selling the assets of a business during a voluntary administration, instead of recommending a debt compromise or ‘Deed of Company Arrangement’. While a fast track sale in a voluntary administration is legal, it is relatively uncommon in Australia. Here we explain how fast track sales work, and consider whether they are a desirable feature of Australian insolvency law. If it occurs, company directors may feel betrayed by a voluntary administrator if they are expecting a debt restructure through a ‘Deed of Company Arrangement’.

How much should a VA for SME cost?

How much do industry insiders expect a voluntary administration for an SME will cost?

Estimated reading time: 6 minutes

Recent research gives a figure for voluntary administration of $30-50,000 per appointment for small sized companies. With a Deed of Company Arrangement (DOCA), this price can easily double. The high cost partially reflects the obligations and liabilities of voluntary administrators, but also, perhaps, a tendency of voluntary administrators to ‘pad’ their hours. By racking up more hours with larger companies, it is possible that voluntary administrators are ‘cross-subsidising’ assetless administrations.

Voluntary administrators are risk-averse

Directors shouldn’t expect voluntary administrators to absorb risk.

Estimated reading time: 8 minutes

Unfortunately the Voluntary Administration process in Australia doesn’t facilitate any downside trading risk during a restructure. The problem discussed is this article is that the voluntary administrator is required to personally bear trading risk and this is a cold shower for any turnaround process.

Local tax obligations for Australian startups

Worldwide taxation – a challenge for Australian startups

Estimated reading time: 6 minutes

Australia applies ‘worldwide taxation’ when calculating corporate and personal income tax. This means Australian startups can owe tax in Australia for all their international activities, even where the founder has moved overseas. Here we explain the key tax rules for Australian startups.

Voluntary administration is risky and expensive

What insolvency insiders think about the costs of voluntary administration

Estimated reading time: 0 minutes

Voluntary administration – until recently the core statutory restructuring mechanism available for Australia businesses – is expensive. Generally speaking, a cheap voluntary administration costs between $30-50,000, all for a process that should be completed within two months.

How NOT to do a Pre-Pack Insolvency Arrangement

How NOT to do a Pre-Pack Insolvency Arrangement: Bad Pre-Insolvency Advice

Estimated reading time: 7 minutes

A recent Victorian Supreme Court case, Intellicomms, shows the dangers of poor pre-insolvency advice and entering into a pre-pack without carrying out sensible due diligence. Here we explain the implications of this case for directors, the appropriate valuation approach to avoid liquidator claims for creditor-defeating dispositions, and what all this means for pre-packs in general.

Voluntary administration has been in decline for 25 years

Voluntary administration in Australia in decline

Estimated reading time: 0 minutes

Voluntary administrations have been in decline in Australia for 25 years. Here we examine why this might be, paying particular attention to the incidence of Deeds of Company Arrangement (DOCAs). Our conclusion is that a confluence of poor public reputation, expense and legislative change has led to the relative unpopularity of voluntary administration as a corporate restructuring methodology

How can creditors participate in a voluntary administration creditors’ meeting

How can creditors participate in a voluntary administration creditors’ meeting

Estimated reading time: 6 minutes

The primary way in which creditors can influence a voluntary administration is through participation in either the first or second creditors’ meeting — meetings chaired by the voluntary administrator. Through this process creditors can replace voluntary administrators, have a say on remuneration and costs, approve of a debt compromise and more.